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ZhenFund Co-Founder Victor Wang: From Empire to Quicksand

· Founders and VCs,ZhenFund

Finding the essence of how the business world is changing today, and looking for investment opportunities accordingly is the methodology I’ve always been applying when making investment decisions.

I’ll sum it up with the following two points:

  • Our modern society is under an ongoing process of “liquefying”. The essence of business evolution has changed from “building an empire” to “following the quicksand”.
  • “Time” has replaced “space” to become the core element in our business world. The only way for a business to survive is to be adaptive to changes fast enough.

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Liquid Modernity, the Fundamental Change In Modern Society

Summary

  • Modernity is transforming the elements of our society from “solids” to “fluids”.
  • The role of culture has been changed from “enlightening” the public to “seducing” it.
  • Business transforms from being “producer-oriented” to being “consumer-oriented”.
  • "Time” is the core element of business, while “speed” is the crux of survival.

The ultimate goal of every entrepreneur was to build a business empire. An empire is a grandiose concept in space, unaffected by the fleeting time and appearing as if it will never be altered.

However, in the era of the Internet, something different is happening. Unicorns are emerging at a faster rate, while those seemingly everlasting business empires could be easily destroyed and burned to the ground shall it not react fast enough to changes.

Therefore, only when we understand the fundamental changes that are happening in today’s business world can we find the path to reconstruct our business dream.

Here, I’m going to introduce to you the most influential sociologist in our contemporary world, Zygmunt Bauman.

About ten years ago, he raised the concept of “Liquid Modernity”. Over his whole life he is trying to answer one single question---what is the essence of the transformation we are currently experiencing and would be facing in the future?

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Modern Society, from “Solids” to “Fluids”

In pre-modern society, people lived based on past experience. Once we had learned something, we ought to preserve it, because it was those past experiences that helped us survive; our future depended on it. Therefore, in the traditional society, things like people’s opinions, behaviors, and political system were solid like a rock.

However, in this highly globalized world, along with the help of Internet, our solid society is dissolving rapidly; when the solid rock of our society pulverized, the basis of our modern world became quick sand.

We live in a fluid world, for which Bauman described as “uncertain”, “flowing”, “insecure”, and “ephemeral”.

In a world like that, the strongest feeling people have is being “out of control”. Who is the Center? Who is the Leader? It’s hard to define. The happiness and comforts of life are decreasing, while anxiety becomes a wide-spread feeling; people are getting more and more vulnerable.

We have to embrace one word: uncertainty.

And I believe that’s where we should stand on when we think about our modern business society.

If we are still trying to design and develop a gigantic, everlasting and unalterable business, it would become outdated the moment it is created, regardless of how much energy and resources we’ve devoted to it.

I remember when I was in Bell’s Lab in 1995, the calendar on my boss’ wall was for 12 months. Half a year later, a new calendar was there, and it was for 6 months only. When I resigned from Bell’s Lab and was planning to devote myself to my company, the New Oriental, I met with him and found out that the calendar on his wall was for 3 months only.

Why? I asked him. And he told me, that 3 months was the time the market gave for a new idea to become a prototype, to be tested in the market, to be improved based on the feedbacks and to be released as the first-generation product.

That was 20 years ago, and Bell’s lab was already embracing the uncertainty and following the trend of liquefying.

For a brief pause, I would sum up the key difference between empire and the quicksand.

An empire is the ultimate goal of a solid society. What is an empire? It’s a space. A territory. A photo of an empire would look almost identical to its photo taken one hundred years ago.

In a fluid society, existence is meaningful only when we consider the dimension of time. Think of it as taking a photo of a river. It only makes sense when we know the time when we took it, because “you could not step into the same river twice”. Therefore, when we are surrounded by quicksand, as we are now in our fluid society, we have to take control of the current moment, because if you miss the time, you would not be able to find out where you are.

***

Culture, from “Enlightenment” to “Seduction”

Bauman thought our society was transforming from “solids” to “fluids”. That naturally raises a question. Has the meaning of culture been changed as well?

What Bauman believed is that, the biggest change in culture was that the purpose of culture has become to “seduce”, instead of to “enlighten” the people.

Culture used to be described as “lighthouse” and “torch”. These are words for enlightenment. Within that context, culture is more advanced, and the public is to be educated and enlightened by culture.

However, the worship for experience is over. Business schools are still insisting on a case-based learning method, when most cases are no longer relevant in a liquefied world. Enlightenment has been replaced, by seduction.

Seduction is different from enlightenment. “Enlightenment” suggests that I am higher than you, while “seduction” implies that I am sitting on the same bench with you, or even sitting lower than you, but I would try everything I can to make you come closer to me. This is how the Internet celebrity economy is currently operating.

Culture in our present world is no longer used to satisfy the needs of the public. They are creating new desires for the people.

***

The Essence of Business, from Producer-Oriented to Consumer-Oriented

As our society is transforming from “solids” to “fluids”, culture from “enlightenment” to “seduction”, the essence of the business world has also changed.

In solid modernity, the focal point of a business is the producers, and thing that business owners care the most about are the connection from factories to the shopping malls. You have to guarantee the smoothness of the production process, along with the delivery process for the products to reach the customers, in order to have a successful business.

In fluid modernity, on the contrary, the focal point of a business is the consumers. The business process no longer starts from the factories to the shopping centers, but instead it starts from the needs of consumers.

Therefore, the fundamental change in today’s business world is that it changes from being producer-oriented to being consumer-oriented.

***

Time, Instead of Space, as the Core Element of the Business World

Bauman believed that there were three main characteristics of a consumer-oriented society.

First, the mortality rate of consumers' desires or wishes is extremely high.

In a consumer-oriented society, the desires people have for a product is short-lived. It leaves as fast as it comes.

In the past, desires people have for a product might last 30 years, or even 50 years. They would be quite satisfied if you fulfill their needs in 10 years.

Now, however, when people are craving for something and you are able to deliver it immediately, you would be fine. Otherwise, when their desires disappear, as they often do in a short period of time, it would be too late to offer your product.

Second, extraordinary ability to reproduce and iterate is the key to stay strong as a business.

Any business model, product or service has to reproduce and iterate faster in order to grab the attention of consumers; when one desire people have is gone, you have to anticipate and catch their new desires as soon as possible, and satisfy these desires faster. That’s the way to survive in today’s business world.

Third, our modern economy is one that coaxes, over-produces and prodigalizes.

What is human nature in our consumer-oriented society? Coaxing.

If desires are ephemeral, then the only thing businesses need is to satiate the consumers. As a business we would give you want you want, seduce and even coax you into buying things in order to generate revenue. More and more producers would come into this industry, to generate an excessive supply and therefore a huge sum of waste. Therefore, in post-modern society, people would experience an abundant amount of supply, while at the same time a strong sense of prodigality.

Bauman didn’t believe this was a problem with our modern time, but instead he considered it as one of the indicators of us entering a consumer-oriented society.

In an apathetic consumer-oriented society, entrepreneurs’ way of thinking must shift from space to time.

“Time” has replaced “space” to become the core element of business; that is to say, business owners have to catch the desires of customers and react accordingly in a short period of time in order to succeed. That’s the starting point of all businesses in our modern society.

Lei Jun and I had invested in a start-up company focusing on online education. When we were having a meeting with board of directors, the founder of this start-up mentioned that he came up with a new feature, and was planning to release it in three months. “It must be released in 3 weeks, otherwise don’t even spend time on this new feature”. Lei Jun insisted.

Time is very important. If you miss the timing, you will never not able to win.

From this perspective, what is the essence of business marketing? In my opinion, business marketing in today’s world is to make sure consumers are craving for your next cash cow before the needs for current products are replaced.

Speed, is the key to survival for a business model.

I believe, the “liquid modernity” model offered by Bauman from the perspective of a sociologist revealed all the fundamental questions of business model innovation in the present day.

This article was originally shared by Victor Wang on August 8, 2017 via the ZhenFund Wechat public account. Translated by Shaolong Lin, and edited by Alissa Wang.

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